Capital One Financial Corporation · NYSE:COF
Capital One Financial — Q2 2023 Earnings Presentation
18 slides from Capital One Financial's earnings presentation, Jul 20, 2023
Slide 1: Second Quarter 2023 Results
Second Quarter 2023 Results July 20, 2023 1
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation and related communications should be read in conjunction with the financial statements, notes, and other information contained in Capital One’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. Please note that
Slide 3: Q2 2023 Company Highlights
Q2 2023 Company Highlights (1) • Net income of $1.4 billion, or $3.52 per diluted common share • Pre-provision earnings(2) increased 7% to $4.2 billion • Provision for credit losses of $2.5 billion • Efficiency ratio of 53.20% • Operating efficiency ratio of 43.36% • Common equity Tier 1 capital rat
Slide 4: Allowance for Credit Losses
Allowance for Credit Losses Credit Consumer Commercial Total Card Banking Banking (Dollars in millions) Allowance for credit losses: Balance as of March 31, 2023 $ 10,410 $ 2,205 $ 1,703 $ 14,318 Charge-offs (1,868) (526) (378) (2,772) Recoveries 340 247 — 587 Net charge-offs (1,528) (279) (378) (2,
Slide 5: Allowance Coverage Ratios by Segment
Allowance Coverage Ratios by Segment Allowance for credit losses ($M) Allowance Coverage Ratio Branded Card 8.8% Credit Card Domestic Card $11,191 $10,976 $10,410 $10,650 $10,576 $10,032 $9,545 $9,165 $8,098 $8,166 $7,673 $7,840 10.46% 10.81% 7.59% 7.70% 7.66% 7.78% 6.76% 6.93% 6.47% 6.82% 6.97% 6.3
Slide 6: Liquidity
Liquidity Average Quarterly Total Liquidity Reserves ($M)(1) Liquidity Coverage Ratio ("LCR") 67 % Q/Q 5 27% Y/Y $126,697 $117,963 $106,577 $93,207 $92,800 $90,557 148% 150% 144% 143% 139% 2Q22 3Q22 4Q22 1Q23 2Q23 4Q19 2Q22 3Q22 4Q22 1Q23 2Q23 Liquidity coverage ratio FHLB eligible loans Cash and ca
Slide 7: Net Interest Income and Net Interest Margin
Net Interest Income and Net Interest Margin ↓1% Q/Q 59% Y/Y $7,197 $7,186 $7,113 $7,003 $6,517 6.80% 6.84% 6.54% 6.60% 6.48% 2Q22 3Q22 4Q22 1Q23 2Q23 Net Interest Income ($M) Net Interest Margin Second Quarter 2023 Highlights • Net interest margin decreased 12 basis points quarter-over-quarter drive
Slide 8: Capital
Capital Amount Ratio Common Equity Tier 1 Capital Ratio (Dollars in millions) Common equity Tier 1 (CET1) as of March 31, 2023 $ 44,634 12.5% Q2 2023 Net income 1,431 40 bps Common & Preferred Stock Dividends (290) (8)bps 12.1% 12.2% 12.5% 12.5% 12.7% Share Repurchases (150) (4)bps Other quarterly a
Slide 9: Financial Summary—Business Segment Results
Financial Summary—Business Segment Results Three Months Ended June 30, 2023 Consumer Commercial (Dollars in millions) Credit Card Banking Banking Other Total Net interest income (loss) $ 4,727 $ 2,269 $ 632 $ (515) $ 7,113 Non-interest income (loss) 1,499 149 257 (6) 1,899 Total net revenue (loss) 6
Slide 10: Credit Card
Credit Card 2023 Q2 vs. Second Quarter 2023 Highlights 2023 2023 2022 2023 2022 (Dollars in millions, except as noted) Q2 Q1 Q2 Q1 Q2 • Ending loans held for investment up Earnings: $21.6 billion, or 18%, year-over-year; Net interest income $ 4,727 $ 4,657 $ 3,899 2% 21% average loans held for inves
Slide 11: Domestic Card
Domestic Card 2023 Q2 vs. Second Quarter 2023 Highlights 2023 2023 2022 2023 2022 (Dollars in millions, except as noted) Q2 Q1 Q2 Q1 Q2 • Ending loans held for investment up Earnings: $21.0 billion, or 18%, year-over-year; Net interest income $ 4,453 $ 4,390 $ 3,651 1% 22% average loans held for inv
Slide 12: Consumer Banking
Consumer Banking 2023 Q2 vs. Second Quarter 2023 Highlights 2023 2023 2022 2023 2022 (Dollars in millions, except as noted) Q2 Q1 Q2 Q1 Q2 • Ending loans held for investment down Earnings: $4.3 billion, or 5%, year-over-year; Net interest income $ 2,269 $ 2,360 $ 2,147 (4)% 6% average loans held for
Slide 13: Commercial Banking
Commercial Banking 2023 Q2 vs. 2023 2023 2022 2023 2022 Second Quarter 2023 Highlights (Dollars in millions, except as noted) Q2 Q1 Q2 Q1 Q2 Earnings: • Ending loans held for investment down $2.0 Net interest income $ 632 $ 648 $ 635 (2)% — billion, or 2%, quarter-over-quarter; average loans held fo
Slide 14: Appendix
Appendix
Slide 15: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 2023 2023 2022 2022 2022 Six Months Ended June 30, (Dollars in millions, except per share data and as noted) Q2 Q1 Q4 Q3 Q2 2023 2022 Adjusted diluted earnings per share (“EPS”): Net income available to common stockholders (GAAP) . . . . . . . . . . . . . . . . .
Slide 16: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 2023 2023 2022 2022 2022 Six Months Ended June 30, (Dollars in millions) Q2 Q1 Q4 Q3 Q2 2023 2022 Total net revenue (GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,012 $ 8,903 $ 9,040 $ 8,805 $ 8,232 $ 1
Slide 17: ACL Coverage % – Commercial Office Real Estate
Commercial Office Real Estate LHFI Transferred from LHFI to LHFS ACL Coverage on LHFI $4,800 50.00% $4,019 $3,984 $3,955 $3,643 40.00% $3,600 $3,465 Funded Balance ($M) ACL Coverage % $888 30.00% $2,400 $2,577 20.00% 13.87% 11.05% $1,200 6.15% 10.00% 2.65% 3.67% $— —% Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 A
Slide 18: Deposits
Deposits Period-end Deposits by Segment $400 $350 $350 $344 $333 $20 $21 $22 $38 $300 $37 $41 $250 $291 $286 $271 $200 $B Q4’22 Q1’23 Q2’23 (1) Consumer banking Commercial banking Other Category Second Quarter 2023 Highlights • Period-end insured deposits were $272.2 billion or 79% of total deposits
Capital One Financial — Q2 2023 Earnings Presentation on 6ix